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Optimal R&D subsidies in a model with physical capital, human capital and varieties

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  • Gómez, Manuel A.
  • Sequeira, Tiago N.

Abstract

In this paper, we analyze the social planner solution of an endogenous growth model with physical capital, human capital and R&D. The model incorporates three sources of inefficiency: monopolistic competition in the intermediate-goods sector, duplication externalities and spillovers in R&D. A complete stability analysis for the optimal growth problem of this model is provided. We characterize the optimal policy that can decentralize the optimal solution and find that the path of the optimal R&D subsidy can be non-monotonic.

Suggested Citation

  • Gómez, Manuel A. & Sequeira, Tiago N., 2013. "Optimal R&D subsidies in a model with physical capital, human capital and varieties," Economic Modelling, Elsevier, vol. 30(C), pages 217-224.
  • Handle: RePEc:eee:ecmode:v:30:y:2013:i:c:p:217-224
    DOI: 10.1016/j.econmod.2012.07.019
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    References listed on IDEAS

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    Cited by:

    1. Agénor, Pierre-Richard & Neanidis, Kyriakos C., 2015. "Innovation, public capital, and growth," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 252-275.
    2. Baris Alpaslan, 2015. "Public Spending and Transitional Dynamics of an Innovation-Based Growth Model," Centre for Growth and Business Cycle Research Discussion Paper Series 199, Economics, The Univeristy of Manchester.

    More about this item

    Keywords

    Endogenous growth; R&D; Optimal policy;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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